Stocks at 52-week low


As the UP election came in the favour of BJP, we saw a great momentum in markets which lift it towards lifetime highs and helps Nifty to cross levels of 9500. But with increasing tension in few sectors, we have seen many stocks quoting at their lowest price.

Pharmaceutical Stocks

While Market has recently marks a new lifttime highs, many other stocks in mid-cap and small-cap Index have marks their lifetime or 52 week lows. This majorly includes Pharmaceutical stocks like Aurobindo pharma, Divis lab, Glenmark pharma etc. Regural USFDA observations against pharma companies and decreasing profit are the two main reasons behind this fall.

Earlier through my post, i had suggested that pharmaceutical sector is not going to be money earning sector for investor except few stocks. And from that time, overall pharma stocks have loosed almost 30 percent. Even now, i think there is much more downside open for pharma stocks, especially those who have faced serious fall in their profits. However, investor must not go for long-term with pharma stocks as per current condition. But a small-term trade can be taken in pharma stocks. I would advice to invest in pharma stocks for long-term only if i see any major change in this sector.

Bankruptcy situation

Videocon Industries and Shilpi cable are the two known companies facing very serious situation of Bankruptcy, especially Videocon Industries. After Dena Bank declaration that they are considering Loan given to Videocon as NPAs, we are seeing a Sharp selling in stock making more and more lower circuits in stock. Total debt on company is around Rs.43,000 crore. Company is not in profitable situation and making high losses.

But i think company has various assets which can be used to reduce significant debts. As i know, a meeting would be held between Management of Videocon and banks to discuss upon the increasing debt. The circuit that we are seeing in stock would only open when the management would give any clearance on what is going on with company and what is the future of company from now. However, i would advice to invest in Videocon industries if the investor find it below Rs.25. The best part of this trade is that taking risk in this investment can have immediate great returns.

Investors of Shilpi cable are also facing same problem going on with Videocon. The stock is getting low with every trading session. In this case, a oversea lender has filed a petition against company under bankruptcy code. The major reason behind this fall is of disappointing working of management against this news spreading fear among investors. I would advice same in this case also that investor can try to buy some position at lower levels to earn immediate returns. Investor or trader can bought some shares if they found this share below Rs.18.

But remember, avoid any large buying in these stocks in single trade. Try to average your position more and more lower if the stock loose from your buying levels.

Reliance Communication

Reliance communication is a group company of Anil Dhirubhai Ambani Group which is leading by Anil Ambani. Tower deal and Aircel merger are the two main events which are expected to change the whole market value of company. But before these deals get done, we are seeing over-selling in stock. After the recent downgrades by rating agencies of its loans, stock fell nearly 20 percent in just one week. But after when company posts a total loss of around Rs.900 crore in its Q4 2017, stock fell nearly 20 percent in single trading session.

All that action going on in stock is due to fear among investors about its debt which stands around Rs.43,000 crore. According to media reports, company has not been able to pay its debt interests on time during its last quarter of FY17. This news is the major reason of sharp fall that we are seeing in stock. Just like in case of Videocon Industries, loans of company can be placed in catogary of NPAs if company get fail to pay their interests on time.

Fear among investors

Now the question that everyone is asking is that is it the right time to invest in rcom or make some shorts in stock to earn some profit. See, their is no chance that company would get closed and declared as Bankrupt because it is a part of Reliance Group. Definitely, group would not like to declare its telecom companys loans as NPAs in any situation because this would lead a large decrease in its other companies value. However, it is getting very clear that its core business of Voice and Data is getting poor and less valuable. But their other businesses is in good state. So, it means that their wireless business merger with Aircel would left a profitable business with stock.

Highlighting all the points, i would recommend to buy Rcom’s stock in cash for long-term but not in F&O because it would have chances of getting large losses. While who wants to make short in stock should go with Options strategy in which there is less risk as the stock is really in very volatile state in F&O. But it’s true that from current price, there is chance of seeing both upper and more lower prices in stock.

Have any question related to this post? Feel free to ask through comment box given below.


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One thought on “Stocks at 52-week low

  • June 1, 2017 at 6:27 pm
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    Hy D.Nageswara,
    As per my calculation, you have lost almost 80% money of your investment in Videocon. I would not advice to buy more shares at lower levels because you have already purchased some shares of company at Rs.225. As per now, you can only do is that to hold your investment until you get a great chance of exit. However, i would advice to invest your another amount of money in those stocks having great potential to recover your lost money. You can buy Universal Cables for long-term which i think can be a multibagger stock. Maybe videocon stock could even go below Rs.20. But, for a trader it can be a great chance for earning immediate returns if lower circuit get opens. But with long-term view, i would advice to avoid this stock as per current scenario.

    Reply

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